exv10wy



 





Exhibit 10.y








Commercial Banking Office




August 12, 2003




Bell Industries, Inc.

1960 East Grand Avenue, Suite 560

El Segundo, California 90245



	 	 	 
	Attention

	 	Russell A. Doll
	

	 	Senior Vice President and Chief Financial Officer







Re: Letter Agreement



Dear Russ:




     Reference is hereby made to that certain Credit Agreement dated as of
April 14, 1999, by and between Bell Industries, Inc., a California corporation
(“Company”), and Union Bank of California, N.A., a national banking association
(“Bank”), as amended by that certain First Amendment dated as of April 26,
2000, that certain Second Amendment dated as of March 27, 2002, and that
certain Third Amendment dated as of April 30, 2003 (as so amended, the “Credit
Agreement”), pursuant to which Bank agreed to extend credit to Company in the
amounts provided for therein. Initially capitalized terms used in this letter
agreement which are not otherwise defined shall have the meanings assigned to
such terms in the Credit Agreement.



     Company and Bank hereby agree as follows:



     Until such date, if any, on which Company delivers to Bank a certificate,
executed by Company’s chief financial officer, certifying, together with
Financial Statements of Company demonstrating, that Company has achieved
Consolidated Adjusted EBITDA in any positive amount for four (4) consecutive
Fiscal Quarter periods, all of the following terms and conditions shall be in
effect and shall supersede any term, provision or condition of the Credit
Agreement to the contrary:



     (a) Minimum Interest Coverage Ratio Inapplicable. Company shall not be
required to comply with, and Bank shall not determine Company’s compliance
with, the negative covenant set forth in Section 7.6A of the Credit Agreement,
which relates to Company’s ratio of (i) Consolidated Adjusted EBITDA to (ii)
Consolidated Interest Expense for each four (4) Fiscal Quarter period;



     (b) Maximum Consolidated Leverage Ratio Inapplicable. Company shall not be
required to comply with, and Bank shall not determine Company’s compliance
with, the negative covenant set forth in Section 7.6C of the Credit Agreement,
which relates to Company’s ratio of (i) Consolidated Total Debt to (ii)
Consolidated Adjusted EBITDA for each four (4) Fiscal Quarter period;



445 South Figueroa Street, Los Angeles, California 9007

P.O. Box 513100, Los Angeles, California 90051-1100

213 236 7529 FAX 213 236 7635



 









 





Bell Industries, Inc.

August 12, 2003

Page 2



     (c) No Events of Default. No Event of Default under the Credit Agreement
(as modified by this letter agreement) shall have occurred and be continuing;



     (d) Total Utilization of Revolving Loan Commitment. The Total Utilization
of Revolving Loan Commitment shall not exceed Two Million Five Hundred Thousand
Dollars ($2,500,000) at any time;



     (e) Minimum Liquid Assets. Company shall maintain at all times
unencumbered and unrestricted Liquid Assets in one or more securities or other
accounts with Bank or any of Bank’s affiliates in an aggregate amount of not
less than Three Million Five Hundred Thousand Dollars ($3,500,000). As used
herein, the term “Liquid Assets” shall mean immediately available (i) cash,
bank deposits, securities accounts, accounts and mutual funds; (ii) investments
in obligations of or guaranteed by the U.S. Government or any agency thereof;
and (iii) stocks, bonds and other debt instruments regularly traded on the New
York Stock Exchange, the American Stock Exchange or NASDAQ, provided that such
assets may be readily converted into cash;



     (f) No New Investments. Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, make any new Investment in any Person,
including any Joint Venture, without Bank’s prior written consent; and



     (g) No Restricted Junior Payments. Company shall not, and shall not permit
any of its Subsidiaries to, directly or indirectly, declare, order, pay, make
or set apart any sum for any Restricted Junior Payment, without Bank’s prior
written consent.



     Nothing contained in this letter agreement shall be deemed to be a waiver
by Bank of any Event of Default that may occur under the Credit Agreement after
the date of this letter agreement, and Bank hereby reserves all of its rights
and remedies under the Credit Agreement and the other Loan Documents with
respect to any Events of Default that may occur after the date of this letter
agreement.



     If the foregoing terms and conditions accurately reflect the mutual
agreement of Company and Bank, please sign and date the enclosed counterpart of
this letter agreement where indicated below, and return same to the undersigned
on or before August 20, 2003.



	 	 	 
	

	 	Very truly yours,
	 
	 	 
	

	 	UNION BANK OF CALIFORNIA, N.A.
	 
	 	 
	

	 	/s/ Peter Thompson
	

	 	
 
	

	 	Peter Thompson
	

	 	Vice President







 









 






Bell Industries, Inc.

August 12, 2003

Page 3


Acknowledged and Agreed 

this 14th day of August, 2003



BELL INDUSTRIES, INC




	 	 	 	 	 
	By:

	 	/s/ Russell A. Doll
	 	 
	

	 	
 	 	 
	

	 	Russell A. Doll	 	 
	

	 	Senior Vice President and	 	 
	

	 	Chief Financial Officer